Photograph by Felipe BuitragoCHECKS AND BALANCES: Gilroy mayoral incumbent Al Pinhiero says the large number of small checks for his campaign are from supporters who give what they can afford.

Gilroy's Cash Politics

A pattern of anonymous donations casts a shroud of secrecy over the financing of next week's election.

By Vrinda Normand

NEXT WEEK, Gilroy residents will hit the polls to vote for a mayor and three new council members. But they won't know where the candidates are raising most of their funds.

That's because the most generous campaign donor in Gilroy, who has poured nearly $200,000 into City Council elections since 1997, is "anonymous."

It's an undiscussed local tradition that has eluded the spirit of campaign finance laws meant to keep politics transparent. In one of Santa Clara County's fastest-growing cities, voters won't even know how much deep-pocketed developers are weighing in on the election.

In fact, according to a Metro analysis, more than 55 percent of the money given to council candidates in the past 10 years is unattributed, reported in large lump sums of donations worth "$99 or less." State law doesn't require that candidates report contributions under $100, so ostensibly they're just receiving thousands of dollars in small chunks. But for taxpaying voters, there's no way to know for sure.

Only the State Fair Political Practices Commission could subpoena those private finance records if they had probable cause to believe that something illegal was happening. Steve Lowney with the District Attorney's political integrity unit said he wouldn't investigate unless an employee came forward claiming to be reimbursed by his/her boss for solicited contributions, clearly against the law.

The situation in Gilroy may be perfectly legal, but it sure looks fishy. Several council candidates have managed to fund almost their entire campaigns with anonymous donations, often pulling in more than $3,000 worth of small checks and cash in filing periods less than two months long.

Current candidates for mayor, incumbent Al Pinhiero and Craig Gartman, both seem to be magnets for anonymous donations. In 2003, Pinhiero funded 68 percent of his campaign ($7,232) with money from unrevealed sources. Gartman did the same in 2001, pulling $10,713 that fed 65 percent of his campaign.
Several people running for City Council (Russ Valiquette, Roland Velasco and Bob Dillon) showed the same fundraising pattern. Valiquette's campaign treasurer had very little paperwork to do in 2003 when he reported a whopping 77 percent ($8,837) of his campaign funding in one lump sum. The same year, Velasco reported $11,533 of anonymous money that made up 55 percent of his total contributions. And Dillon's last election in 2001 ran on $5,718 from unattributed sources, filling 72 percent of his campaign account.

So what's going on?

Pinheiro said his supporters want to participate in the democratic process, so they just give what they can afford—often in checks for $50, $75 or $99.

Valiquette told Metro that in a city with just under 50,000 residents, people are sometimes afraid to make their political allegiances public. "People in this area know one another," he said, "and believe you me, when it comes to politics, they are very opinionated."

"We're a small community in Gilroy," Gartman explained. "Donations affect business relationships. People are afraid of putting up signs."

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Whose Money?

It's possible that political fundraising in Gilroy is just far more grassroots than in other Santa Clara County cities. But then, there are the developers, who have big bucks at stake in the building of new homes and commercial complexes in a booming area.

In 2006, Gilroy planners approved 1,544 building permits, valued at $118 million in construction costs alone. In the first nine months of this year, they've authorized 987, totaling $93 million in construction.

One source, who asked that we not reveal his name for fear of retribution, used to manage political campaigns in Gilroy and said it is common practice to solicit multiple $99-or-less donations from developers hoping to get their local projects approved.

"I know how it's done down here," he said. "Candidates take a stack of 25 self-addressed envelopes and give them out to every developer" who then fill the envelopes with checks from their subcontractors and other business partners.

"You don't want it to be recorded, because you don't want to make political enemies," he explained. "Everybody knows which subcontractors work with which developers. People would catch on."

However, some dots did get connected in 2005 when developer James Suner appeared to be skirting campaign finance laws by contributing to four candidates from five different LLCs, or partnerships, in which he has a stake. Suner wrote "above the table" $250 checks—the maximum allowed for each donor per candidate, per election—and had to take back the money he gave from LLCs in which he shared more than 50 percent ownership.

News reports from 2005 quote Suner blaming his error on fuzzy campaign finance laws. The developer wouldn't clarify his case any further when asked about it by Metro.

"I intentionally write the checks for more than $99 so they get reported," he said. "If there's a problem later on, it's on the record and there's transparency."

"If I want to circumvent campaign finance laws," he added, "there are a lot more interesting ways to do it."

Like how?

"I can write an unlimited number of $99 checks and nothing ever gets reported," he said.

Mayoral candidate Gartman admitted that some developers ask him for multiples envelopes so they can pass them on to "friends and family and maybe some of their contractors." "I have asked a number of developers if they would be taking a position of political support," he said, and often provides more than one envelope if the answer is "Yes."

Gartman's contributions usually come back in payments of $99.

"Draw what conclusion you wish," said Gartman.

Bob Stern from the California Center for Governmental Studies says the onus falls on Gilroy itself to close up the reporting loophole. If city officials wanted to, he says, they could lower the threshold to $25 or $50 dollars for reporting campaign contributions—municipal rules can be tougher than the state laws, and there are about 100 cities in California that have stricter disclosure laws for public financing.

"The problem," says Stern, "is that the people who have to change the law are the people who are receiving these checks. They're the officials; they're not likely to want to change the law."

Stern says it sounds to him like the checks are being "bundled," with many coming from one developer's sphere of influence.

"Clearly there's a deliberate effort going on not to disclose contributions, there's a system. That's what it sounds like."